Sun 7 Nov 2010

Facebook Movie Review

Posted by andrew under Reviews
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In the lead-up to having our second child, we are getting in some things that will be harder to do once there’s a newborn around. So, about a week ago, thanks to our baby-sitting neighbour, we got out to see a movie together.

We are fans of Aaron Sorkin‘s oeuvre, with the box sets of both The West Wing and Sports Night in our TV cabinet. Since he’d been out here in Australia spruiking his new film recently, and that was its opening night, the choice of what to see was pretty simple.

The Social Network

A tale of friendship and betrayal with a lot of geeky detail mixed in

This is a film that follows the Sorkin model. Sports Night had rapid-fire technical sport talk, West Wing had a thousand-words-a-minute political speak, and The Social Network has a firehose of geek speak and technical computer detail. But in none of those cases did it really limit your understanding of the plot, and on the contrary, it does at least make you feel smart.

It also doesn’t hurt that the movie is well cast and acted, and dialogue is clever and humorous. Because it’s based on a true story, you already know how it will end – Facebook will be a success – but the tale isn’t about Facebook, so much as the interesting bunch of people who were around in the early days of the social networking website, and the roles they played in bringing it about.

Perhaps these characters are as much the social network of the title as the website. They are excellent fodder for Sorkin’s script and part of the enjoyment for me was in the fleshing-out of the characters as the film progressed.

While Mark Zuckerberg doesn’t get a particularly favourable presentation in the movie, his friend Eduardo Saverin is treated very sympathetically. Still, Zuckerberg is presented in a way that allows us to feel that we can almost understand him and what has driven him to become the billionaire and social media titan that he is today.

Another aspect that comes across well is the excitement and craziness that comes from being in a high-growth start-up. This is another thing Sorkin is good at capturing, whether it is the crazy cultures of the armed forces, top-tier politics or TV journalism. In this case, it helps explain the lure of why people would want to join a start-up (despite the high risk and long hours).

So, while this isn’t a truly great movie, it was a very interesting one. Especially so as the influence of the Facebook social network continues to grow in our lives. By getting a perspective on the early days of this service, it helps in understanding the changes Facebook is undergoing.

Rating by andrew: 3.5 stars
***1/2

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Sat 11 Sep 2010

Perhaps there was no Tulip bubble

Posted by andrew under Musings
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I’ve been trying to understand what a financial bubble really means, and in the course of this, came across some interesting information: apparently the great Dutch Tulip bubble of the 1630s wasn’t a bubble after all. Although I am wary to merely summarise stuff that is written better elsewhere, I thought this was a good one to share.

Background

Tulips came to the Netherlands from Turkey in the 1500s, and became a popular status symbol. Multicoloured varieties were produced due to the effects of a plant-specific virus, and as a result (skipping the details), it would take at least seven years after planting the bulb of a spectacular tulip to produce new tulips from it. Understandably, possessing a spectacular tulip bulb gave you an advantage for quite a period of time before others could gain a similar bulb.

Due to rising prices, speculators entered the tulip market in 1634, and a more formal futures market in bulbs arose in 1636. By some accounts, offers for single bulbs reached insane levels, e.g. 49,000 m^2 of land for a bulb. In February 1637, the price of tulips crashed. For the next few centuries, “tulip mania” is used as a textbook example of crazy market behaviour with a boom and bust.

Why not a bubble?

If a bubble is where markets are caught up in “irrational exuberance”, then it appears that this market continued to be rational. And if a bubble is where a market eventually “pops” and the resulting crash causes widespread losses, then it appears that losses were not significant. Of course, it is hard to know for sure, since all of this happened almost four centuries ago, but there is apparently some evidence that:

  • In February 1637, the futures contracts all became options contracts, i.e. the purchaser of a contract to buy bulbs no longer had the obligation to purchase or take delivery of the bulbs if it looked like they would make a loss.
  • This change was known to be coming from several months beforehand, encouraging purchasers of contracts to agree to high bulb prices with minimal risk. Taking this perspective, the contracts were rationally priced.
  • Actual tulip prices (as opposed to the price of these futures contracts) remained at ordinary levels.
  • The Dutch authorities halted the trade in the contracts, and later decreed them unenforceable gambling debts. So, given that no tulips changed hands that winter (as the tulips would’ve all been in the ground) and the contracts were unenforceable, it’s not clear that there were any significant losses made.
  • Most of the support for claims of a tulip bubble come from some anti-speculation propaganda published soon afterwards.

Perhaps, then, there was no Tulip bubble. I guess all those textbooks need updating.

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Fri 3 Sep 2010

How the 80s became the naughties

Posted by andrew under Reviews
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One of the defining events of the naughties – the first decade of this millennium – was the global financial crisis. How mortgage defaults in a few US states, leveraged many times over through the global financial system, brought about a crash in the world’s stock markets and a world-wide recession. But its genesis was in 1980s Wall Street as chronicled by ex-Salomon Brothers employee Michael Lewis.

Liar’s Poker

Vulgar, incredible and fascinating take on 1980s finance

I listened to the audio book earlier this year, and Lewis’ tale blew my mind. Here was a person who, by rights, should not have been in that place at that time, as he didn’t have the traditional qualifications to get a job trading at Salomon Brothers, nor did he even interview for the job. Furthermore, instead of continuing to make wads of money, he chose to quit and write an account of it. Lastly, it was written well in a very accessible style. The chance of all these things happening must have been minuscule – and yet they did.

If Lewis is to be believed, and he presents himself credibly, Wall Street in the 80s was inhabited by a bunch of racist, chauvinist cowboys who through luck more than wisdom and possessing a complete disregard for their customers managed to make out like bandits. This is, of course, completely counter to the image that Wall Street projects of itself to its customers.

The story is part-memoir, part-history and part-ethnography. The author’s prior education was in art history, and second career was in journalism, and he picks out the threads that led to the particular situation that he was dropped into, as well as charting his progress through the firm and documenting its culture. It is a unique book, and truly fascinating, even if you don’t have a background in finance let alone the bond market.

My rating: 4.5 stars
****1/2

Liar’s Poker

First-hand account of Wall Street’s cowboy culture and the rise of mortgage bonds

Most recently, Kate gave me a paper copy of Liar’s Poker, given how much I enjoyed the audio book. I quickly discovered that it was a rather different book.

Liar’s Poker was Lewis’ first book, and the text really does feel like it. For example, paragraphs feel like they are crammed full of information. In the audio version this wasn’t so obvious. Also, there is a great deal of background, historical information in the middle of the book, which I found bogging down the interesting personal tale, and much of which was excised from the audio book version. The book would’ve benefited from more aggressive editing, and the audio book, being an abridged version, had effectively received this.

That said, it remains a compelling tale. All of the aspects that I liked in the audio book version, I still found in the paper version, although it was less focussed. Perhaps if another reader hadn’t experienced the audio book first, there wouldn’t have been an expectation of a fast pace already set.

My rating: 3.5 stars
***1/2

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Tue 29 Sep 2009

History Repeats

Posted by andrew under Musings
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When I heard that the name for the new variant of Vegemite was “iSnack 2.0″, it took me a little while to understand that it wasn’t a joke. The new variant is basically 30% Vegemite and 70% cream cheese, but apparently it deserved a revolutionary new name.

Although I am horrified at the thought of a breakfast spread that includes not only punctuation but numbers in its name, there seems to be historical precedent for this sort of crazy naming. Here’s what Wikipedia says..

  • Just like the new variant was named following a national naming competition, the original was named following a similar competition back in 1922.
  • Just like the new name is extremely derivate of popular products on the market, the original name was derived from the popular spread Marmite that was shipped to Australia from 1919.

Although, Vegemite wasn’t always called Vegemite. From 1928 to 1935 it was sold as Parwill, in order to work with a marketing slogan of “Marmite but Parwill” (get it?). Obviously, the product name was changed back when the marketing didn’t work. So, if history continues to repeat, perhaps iSnack 2.0 will be given a less ridiculous name once the marketing people wise up. We can only hope.

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Sun 6 Sep 2009

Melbourne Chocolate

Posted by andrew under Musings
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Melburnians seem to take their chocolate heritage for granted. I still find it amazing, and while I still do, I want to jot it down here.

Both Melbourne citizens and Australians in general are fans of chocolate. According to IBISWorld, chocolate and confectionery in Australia is a $2.5b per year industry. If we look at Nielsen’s list of the top confectionery sold in convenience stores during the year to February 2009 by share of value, the top chocolate bars (candy bars, for US readers) were:

  1. Mars 2Pak 80g
  2. Snickers 2Pak 80g
  3. Cherry Ripe 85g
  4. Mars Bar 65g
  5. Twirl Bar Kingsize 63g
  6. Snickers 60g
  7. Kit Kat 45g
  8. Boost 80g
  9. Turkish Delight Twin 76g
  10. Cherry Ripe 55g

I’m listing these to highlight an interesting fact. However, we need to examine where each of these chocolate bars were invented:

Yep, the Cherry Ripe holds two of the top ten places for chocolate bar sales, and it was invented in Melbourne. (All the rest come from three places: US, UK and Ireland.)

Noted Melburnian Sir Macpherson Robertson (1859 – 1945) founded the MacRobertson’s chocolate company which, according to Wikipedia, was responsible for the Cherry Ripe, Freddo Frog, Bertie Beetle and Snack. The chocolate company was sold to Cadbury-Schweppes, and the Ringwood-based factory continues to this day. Sadly, they don’t offer any public tours.

The MacRobertson name no longer appears on the Cherry Ripe wrapper, but it does live on in Melbourne through a highschool, a bridge, and the building of the National Herbarium of Victoria.

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